Ardagh seeks permission for demerger

The battle for control of Ardagh, one of the largest glass makers in the UK, looks set to be settled this week when shareholders meet to approve a demerger of the Irish company's manufacturing operations.

The demerger plan requires 75 per cent support, but it already has the backing of the largest shareholders - HG Capital with 30 per cent and Yeoman, an investment vehicle set up by Paul Coulson, the Ardagh chairman, which has 23.2 per cent.HG Capital, formerly part of Mercury Asset Management, has agreed to take cash, at €1.10 a share, if the demerger is approved.

This is less than the €1.70 which Sean Quinn, a rival glass producer in Northern Ireland offered shareholders, which the board rejected on Friday. Some shareholders have complained to the stock exchange that the independent directors should have considered the Quinn bid. Quinn now wants its offer to be put to the extraordinary meeting on Wednesday.

But one Dublin broker said yesterday Ardagh was worth closer to €5 a share if its recently announced option to buy Heye Glass in Germany is included. Florence O'Donoghue, of Davys, calculates projected earnings before interest, tax, depreciation and amortisation could reach €90m (£58m), compared with €65m achieved in 2001.

Ardagh closed its Irish glass plant last summer, in the face of competition from the much larger Quinn plant, which receives Northern Ireland grant support. However, the move did much to improve the problem of overcapacity in the market, and helped lift glass prices in the UK where it is one of the largest manufacturers with about 38 per cent of the market, having acquired Rockware from Owens Illinois, the US group, in 1999.

Ardagh also has a small Italian operation making beer glasses.

The battle for control of Ardagh comes amid wider consolidation moves in the European glass industry with Rexam, the UK consumer packaging company, announcing a second glass container acquisition in Germany.

600450 Ardagh seeks permission for demerger

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